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Wheat Market Update - Friday 16th December 2005
Welcome to the final Wheat Update of 2005. I would
like to thank you for your interest over the past 12 months, and we
look forward to keeping you well informed throughout 2006.
On behalf of myself and the Wheat Department here at ADM Milling,
we would like to wish you a very Merry Christmas and a Happy New Year.
Yours sincerely
Gene Senesac
Trading Director
UK
• LIFFE futures down about 25p in last week of quiet holiday trade.
• Cash premiums following futures also slightly lower.
Europe
• Brussels awarded 350k at max euros 8 yesterday in free market
tender.
• Total grains offered to intervention stands just over 5 mmt with
over half from Hungary.
• Total wheat offered to intervention is near 42%.
• Strategie Grains has estimated EU wheat up 6% at 121.9 mmt for
’06 (vs. 115.2 mmt this year).
• Total cereals estimated up 5% at 268.7 mmt.
• Planted acreage for wheat estimated to be up 2% and yield up
4%.
• Main increases are likely to be seen in Spain, France, and Germany.
• French exports to balance EU and non-EU estimated to be just
shy of year ago as gaining competitiveness with Black Sea region.
North America
• Total wheat acreage for 06/07 estimated by some to be up about
1.7%.
• Spring wheat (including DNS) estimated to be down slightly.
• No new business from lakes for this shipping season as cold weather
has settled in.
• DNS premiums slightly weaker, while futures stronger on technical
bounce.
• USD has weakened of late (to $1.77/£) on expectations of
end to rate hikes at start of ’06.
• U.S. is soon to drop 11% import tariff on Canadian wheat; viewed
as slightly negative toward quality wheat premiums, but some expect
will be more opportunity for feedwheat to move south across border.
• Funds have been covering a record short in Chicago futures and
have pulled MGE (DNS) futures higher as well.
• Some expectations that influx of fund $ into commodities in the
New Year will carry wheat higher, yet fundamentals of market, however,
do not support at this time.
• Need to watch weather patterns in U.S. as another cold snap is
forecasted by some for next week, and if no snow covers, it could be
concern again of winterkill.
World
• Argentina crop near 30% harvested; exports for this year forecast
at 4 mmt (vs. 7 mmt yr ago).
• Ukraine and Russian wheat crops lower in the coming year due
to reduced acreage from dry planting season.
• World production estimated by USDA to be up over 4mmt.
• Look for increase in imports from China and India next season.
Wheat Market Update - Thursday 8th December 2005
UK
• LIFFE futures down slightly this week due to light trade.
• Cash wheat premiums practically unchanged.
• Market definitely has the feel of “holiday mode”.
• Seems to be a lull in U.K. export shipments currently; return
of a line-up could provide a lift to nearby demand.
• New crop breadmaking wheat premiums reflect concerns of a potential
tight Group 1 market next year.
• New crop biscuit values suggest little concern from the sellers
about availability as very little risk premium is built in.
World
• Egypt bought 85k of Russian milling wheat for late January.
• Canada has estimated this year’s crop at 26.775 mmt (trade
expected 26 mmt).
• Record cold in parts of the U.S. extending across much of the
HRW area.
• U.S. futures slightly weaker over past two sessions on professional
fund selling, disappointment over
Egypt tender, higher Canadian crop.
• Argentine harvest estimated at 24% complete.
Wheat Market Update - Tuesday 6th December 2005
UK
• Marketplace appears to be entering “holiday mode”
with trading volumes suffering.
• Biscuit wheat getting more focus than breadmaking (combined miller
and exporter interest).
• LIFFE futures practically unchanged over the past two weeks.
Europe
• Cash refund unchanged last week at euros 5 for 30k mt.
• France sold 120k mt to Egypt for January.
• German E market steady; supported by demand to other EU destinations.
North America
• Expectations for a slight increase in Canadian crop to 26 mmt.
• DNS premiums continue to be firm, as are futures.
• Some very cold weather in the HRW plains states; some concern
over winterkill potential in Kansas.
• Dry in southern plains (HRW).
• U.S. futures may be heading into a period of seasonal strength,
albeit fundamentals will need to support as well.
Other World
• Questions being raised as to whether India and China will import
much wheat this season.
• USDA report that Friday is expected to show a slight increase
in world production.
• Australia production estimates near 24 mmt; recent rain leave
quality in doubt; 10% harvested thus far.
• Argentina close to 20% harvested; production estimated at just
over 11 mmt.
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